Volkswagen Group (sometimes abbreviated VW Group[5] and previously known as VAG[6]) is a German automobile manufacturing group. As of 2008[update], Volkswagen was ranked as the world’s third largest motor vehicle manufacturer and Europe's largest.[7]

The Group's parent company Volkswagen Aktiengesellschaft,[8] usually abbreviated to Volkswagen AG, develops vehicles and components for all marques of the whole group, and also manufactures complete vehicles for the Volkswagen Passenger Cars and Volkswagen Commercial Vehicles marques.[8] Volkswagen Group is divided into two primary divisions: the Automotive Division, and the Financial Services Division.[1] The Group consists of 342 Group companies, which are involved in either vehicle production or other related automotive services.[1]

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In 2009, according to data published by all three companies, Volkswagen was the third biggest motor vehicle manufacturer, with 6.29 million units delivered to customers,[9][10] after Toyota Group with 7.23 million units[11] and General Motors, with 6.503 million units.[12]

Volkswagen's second-largest market is China, where its subsidiary, Volkswagen Group China (VGC), is the largest joint venture automaker, selling more than one million vehicles in 2008.[1] The Volkswagen Golf is the third bestselling automobile in the world, selling over 26 million units through 2008.[1] In 2010, Volkswagen Group sold 7.28 million vehicles,[2] claiming 11.4% of the world passenger car market.[13]

Volkswagen AG is heavily involved in sports sponsorship, with investments having included the 2008 Summer Olympics and the 2014 Winter Games,[14][15] as well as the David Beckham Academy. The company also wholly owns the Bundesliga football side VfL Wolfsburg.[16] The company is also the shirt sponsor of Major League Soccer club D.C. United.

In August 2009, Porsche SE and Volkswagen Group reached an agreement that Volkswagen AG and Porsche AG would merge in 2011.[17][18]

Volkswagen was founded on 28 May 1937 as the Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH[19] ("Society for the preparation of the German People's Car", sometimes abbreviated to Gezuvor[20]) by the NaziDeutsche Arbeitsfront[21] (German Labour Front). The purpose of the company was to manufacture the Volkswagen Type 1, later better known as the Volkswagen Beetle.[19] On 16 September 1938, the company was renamed Volkswagenwerk GmbH[19] ("Volkswagen Factory limited liability company").

After the Second World War in Europe, in June 1945, Major Ivan Hirst[19] of the British Army Royal Electrical and Mechanical Engineers (REME) took control of the bomb-shattered factory, and tried to dismantle it and ship it home. However, no British car manufacturer was interested; "the vehicle does not meet the fundamental technical requirement of a motor-car ... it is quite unattractive to the average buyer ... To build the car commercially would be a completely uneconomic enterprise".[22] As part of the Industrial plans for Germany, large parts of German industry, including Volkswagen, were to be dismantled. Total German car production was set at a maximum of 10% of the 1936 car production numbers.[23] The company survived by producing cars for the British Army, and in 1948, the British Government handed the company back over to the German state, where it was managed by former-Opel chief Heinrich Nordhoff.

Volkswagen's Golf is the third best-selling car in the world, selling over 26 million through 2008

In 1960, upon the floatation of part of the German federal government's stake in the company on the German stock market, its name became Volkswagenwerk Aktiengesellschaft (usually abbreviated to Volkswagenwerk AG).

Another German manufacturer, NSU Motorenwerke AG, was merged into Auto Union on 26 August 1969, creating a new company, Audi NSU Auto Union AG (later renamed AUDI AG in 1985).[24]

From the late 1970s to 1992, the acronym V.A.G was used by Volkswagen AG as a brand for group-wide activities, such as distribution and leasing. Contrary to popular belief, "V.A.G" had no official meaning.[6]

On 30 September 1982, Volkswagenwerk made its first step expanding outside of Germany by signing a co-operation agreement with the Spanish car manufacturer SEAT, S.A..[24]

In order to reflect the company's increasing global diversification from its headquarters and main plant (the Volkswagenwerk in Wolfsburg), on 4 July 1985, the company name was changed again - to Volkswagen Aktiengesellschaft (Volkswagen AG).

On 18 June 1986, Volkswagen AG acquired a 51% controlling stake in SEAT making it the first non-German subsidiary of the Volkswagen Group. On 23 December the same year, it became the Spanish company's major shareholder by increasing its share up to 75%.[24]

In 1990 - after purchasing its entire equity - Volkswagen AG took over the full ownership of SEAT making the company a wholly-owned subsidiary, and on 28 March 1991 another step to the expansion of the group's activities was made through the signing of a joint venture partnership agreement with Škoda automobilová a.s. of Czechoslovakia, accompanied with the acquisition of a 30% stake in the Czech car manufacturer,[24] raised later on 19 December 1994 to 60.3% and the year after, on 11 December 1995, to 70% of its shares.[25]

On 30 May 2000, Volkswagen AG - after having gradually raised its equity share - turned Škoda Auto into a wholly-owned subsidiary.[24]

From 2002 up to 2007, the Volkswagen Group's automotive division was restructured so that two major Brand Groups with differentiated profile would be formed,[26] the Audi Brand Group focused on more sporty values - consisted of Audi, SEAT and Lamborghini - and the Volkswagen Brand Group on the field of classic values - consisted of Volkswagen, Skoda, Bentley and Bugatti[27][28] - with each Brand Group's product vehicles and performance being respectively under the higher responsibility of Audi and Volkswagen brands.

Under the so-called "Volkswagen Law", no shareholder in Volkswagen AG could exercise more than 20 percent of the firm's voting rights, regardless of their level of stock holding.[29] In October 2005, Porsche acquired an 18.53 percent stake in the business, and in July 2006, Porsche increased that ownership to more than 25 percent. Analysts disagreed as to whether the investment was a good fit for Porsche's strategy.[30]

On 26 March 2007, after the European Union moved against a German law that protected Volkswagen Group from takeovers,[31] Porsche took its holding to 30.9 percent, triggering a takeover bid under German law. Porsche formally announced in a press statement that it did not intend to take over Volkswagen Group, setting its offer price at the lowest possible legal value, but intended the move to avoid a competitor taking a large stake, or to stop hedge funds dismantling Volkswagen Group, which is Porsche's most important partner.[32] On 3 March 2008, Porsche announced that it has decided to increase its Volkswagen AG stake up to 51 percent, which would be completed before the end of the year. This was announced just hours after VWAG declared it would take a majority stake in the Swedish truck and engine maker Scania.[33]

On 16 September 2008, Porsche announced that the company had increased its stake in Volkswagen AG to 35 percent.[34] As of October 2008, Porsche held 42.6 percent of Volkswagen AG's ordinary shares, and holds stock options on another 31.5 percent. On 28 October 2008, Porsche announced that they effectively held over 74 percent; 42.6 percent actual shares, and the rest as convertible options. It was announced on 7 January 2009 that Porsche now owns 50.76 percent of Volkswagen AG.[35] Volkswagen AG briefly became the world's most valuable company, as the stock price rose to over €1,000 per share as short sellers tried to cover their positions.[36]

The current[update] share ownership of Volkswagen AG is distributed as follows:[37]

In percent of subscribed capital as of 31 December 2010 (2010 -12-31)[ref]:

Volkswagen AG shares are primarily traded on the Frankfurt Stock Exchange,[38] and are listed under the 'VOW' and 'VOW3' stock ticker symbols. First listed in August 1961, the shares were issued at a price of DM 350 per DM 100 share,[38] Volkswagen AG shares are now separated into two different types or classes: 'ordinary shares' and 'preference shares'.[38] The ordinary shares are now traded under the WKN 766400 and ISIN DE0007664005 listings, and the preference shares under the WKN 766403 and ISIN DE0007664039 listings.[38]

Volkswagen AG shares are also listed and traded on other major domestic and worldwide stock exchanges. In Germany's domestic exchanges, since 1961 these include those in Berlin, Düsseldorf, Hamburg, Hanover, Munich and Stuttgart. International exchanges include those in Basel (listed in 1967), Geneva (1967), Zürich (1967), Luxembourg (1979), London (1988), and New York (1988).[38]

Since the start of trading in 1961, Volkswagen AG shares have been subjected to two stock splits - the first was on 17 March 1969 when they were split at a ratio of 2:1, from a DM 100 share to a DM 50 share. The second split occurred on 6 July 1998, the DM 50 share being converted into a share of no overall nominal value, at a ratio of 1:10.[38]

From 23 December 2009, Volkswagen AG preferred shares replaced its ordinary shares in the DAX index.[39]

Bugatti Automobiles S.A.S., and the Bugatti marque: 100% ownership via the Volkswagen France subsidiary, Bugatti Automobiles S.A.S. was created after Volkswagen Group purchased the right to the Bugatti marque.[41]

SEAT, S.A.,[3] and the SEAT marque: 100% ownership since 1990; initially in 1982 a co-operation agreement with Audi AG; 51% and 75% ownership in 1986, being the first non-German subsidiary of the Volkswagen Group.[24]

Scania AB (publ),[3] and the Scania marque (controlling shareholder): Acquired July 2008 becoming the 9th marque of the Group,[1] 70.94% of voting rights as of 30 November 2009 (2009 -11-30)[ref].[42]

Note: From July 1998 until December 2002, the Group's Bentley division also sold cars under the Rolls-Royce marque, under an agreement with BMW, which had bought the rights to the Rolls-Royce name, but not the Rolls-Royce operations. From 2003, only BMW has been able to make cars under the Rolls-Royce marque.

The Group also owns five inactive marques, via Audi AG:

Auto Union (the Auto Union company, together with NSU Motorenwerke AG (NSU), were merged into "Audi NSU Auto-Union AG" in 1969. The name was shortened to "Audi AG" in 1985, and the interlocked four-ring badge from Auto Union is still used by Audi AG).

NSU Motorenwerke AG (NSU) - bought in 1969 by Volkswagen AG, and merged into Audi AG; the NSU brand has not been used since 1977. However, the current Audi AG shares trade under the ticker symbol "NSU".

Volkswagen Group revealed on 24 October 2009 that it had made an offer to acquire long-time partner and German niche automotive manufacturer Wilhelm Karmann GmbH out of bankruptcy protection.[43] In November 2009, the Supervisory Board of Volkswagen AG approved the acquisition of assets of Karmann, and plan to restart vehicle production at their Osnabrück plant in 2012.[44]

In December 2009, Volkswagen AG bought a 49.9% stake in Dr. Ing. h.c. F. Porsche AG (more commonly known as Porsche AG) in a first step towards an 'integrated automotive group' with Porsche. This was agreed between Volkswagen AG and Porsche SE during negotiations on the contracts of implementation relating to the merger of the two companies.[17][18] The merger of Volkswagen AG and Porsche SE is scheduled to take place during the course of 2011, under VW appointed CEO Matthias Müller.[45]

Volkswagen AG completed the purchase 19.9% of Suzuki Motor Corporation's issued shares on 15 January 2010.[46] Suzuki intends to invest up to one half of the amount received from Volkswagen into shares of Volkswagen.[47]

On 25 May 2010, it was announced that Volkswagen Group, through it subsidiary Lamborghini Holding S.p.A., had acquired a 90.1% stake in the Italian automotive design house Italdesign Giugiaro.[48]
In only less than three months time, the transaction had been completed making the Italian firm a member of the Volkswagen Group.[49]

Volkswagen AG is the controlling shareholder in the Swedish commercial vehicle and diesel engine maker Scania AB,[3] with a capital stake of 37.73%, and 68.60% of the voting rights. Volkswagen AG originally acquired a stake in Scania after Volvo's aborted takeover attempt in 2000, and then increased that to a capital stake of 16.5% and a voting stake of 33.4% in 2007. On 3 March 2008, Volkswagen announced that it would acquire all the shares in Scania AB held by Investor AB and the Wallenberg Foundation. Once cleared by the relevant authorities, Scania became the ninth marque in the Volkswagen Group.

On 4 October 2006, Volkswagen acquired a 15.1% stake in German commercial vehicle maker MAN AG,[3] and later increased to 29.9%. In 2007, MAN AG launched a hostile offer to acquire Scania AB, but this was subsequently withdrawn.

Former Volkswagen Group CEO Bernd Pischetsrieder, and his successor Martin Winterkorn, have considered a three-way merger between MAN, Scania, Volkswagen AG's own Brazilian heavy truck division, and possibly their light truck and van division as well. Due to the size of Volkswagen AG's stakes in MAN and Scania, it is expected that Volkswagen AG would own a majority stake in such a merged entity.

The Wallenberg family began divesting its interests in various Swedish companies, but as a result of Volvo's aborted takeover of Scania AB (publ), it agreed to hold a "significant share holding" in only one of Sweden's heavy truck manufacturers. This resulted in Volkswagen AG securing an 18% capital stake and 34% voting stake in Scania AB. On the 3 March 2008, it was announced that the Wallenberg's would sell their remaining stake in Scania AB to Volkswagen AG.[50] The purchase of the stake increased Volkswagen AG's total votes in Scania to 68.60% (previously 37.98%) which corresponds to 37.73% of the capital (previously 20.89%).[50] As of 30 November 2009 (2009 -11-30)[ref], Volkswagen AG holds 70.94% voting rights and 45.66% overall capital of Scania AB.[42]

Volkswagen AG has a 29.9% stake in German truck manufacturer MAN SE (formerly MAN AG). In 2006, MAN AG launched a takeover bid for the Swedish truck maker Scania, in which Volkswagen AG held, at the time, 20.3% of company and 35.31% of the voting stock. Volkswagen AG had previously announced that it would like to see MAN and Scania merge, together along with Volkswagen Commercial Vehicles Truck and Bus operations, and form a new company in which Volkswagen AG has a blocking minority stake. However later press released stated that such a merger was not a priority, and Scania would continue to be run as a separate entity. A merged MAN-Scania would become the largest European truck maker, leapfrogging both Volvo AB and Daimler AG. However, Daimler will still be the largest worldwide truck maker, as it has operations in the U.S., where MAN and Scania currently do not.